Europe Watch: Macron Mulls Early Elections as Global Trade Shifts Weigh on Outlook

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3720-1.3950

Euro                 1.5660-1.5900

Sterling            1.8300-1.8540

WTI Oil (opening level) $63.24

The CAD/USD is opening at 1.3826 ( 0.7232 )

Headlines

·    Bloomberg reported that US Treasury Secretary Bessent expects de-escalation in the China tariff standoff, though FBN's Gasparino suggested his comments were overstated, though later US President Trump himself said that US tariffs on China will not stay at 145%. “It will come down substantially. It won’t be zero. It used to be zero.” Politico noted that the White House is close to trade deals with Japan and India, with details to be finalized later.

·    Trump confirmed he won't remove Federal Reserve Chair Jerome Powell, easing investor concerns about central bank independence and policy stability.

·    IMF warned that rising US tariffs are slowing global growth, reducing its 2024 forecast to 2.8%. The US will be heavily impacted, with 2025 growth cut to 1.8%. Mexico, China, and the Eurozone will also be affected.

·    French president Macron floated the idea of new French legislative elections as early as this fall as his popularity has rebounded in the new geopolitical environment since US President Trump’s election and the prior French legislative election last summer

Key Points

·    Equities: US-China trade optimism; Powell stays; Tesla, 3M rise; industrials hit by tariffs

·    Volatility: VIX sharply down; reduced trade war fears; focus on corporate earnings and PMI data

·    Digital Assets: BTC stable; ETH and crypto stocks rally; Strategy’s large BTC purchase boosts sentiment

·    Currencies: US dollar rebounds sharply on Trump rhetorical shift on tariffs, Fed interference

·    Fixed Income: US 10-year yields down, 2-year yields down on Trump change of tone

·    Commodities: Gold slumps as Trump eases tensions; data shows healthy oil demand, and copper sees strong rebound